In October 2020, the first indication of the massive stress AirAsia India was in came to light. AirAsia had just shut down the Japanese unit, and news of AirAsia India funding being withdrawn by AirAsia Bhd. Tatas, the majority shareholder have been providing stopgap funding to the airline for the time being as per this AirAsia India news which has been doing the rounds for weeks now.
Now, AirAsia has indicated that they could be on their way to exiting India. In a release issued by AirAsia Bhd,
Our businesses in Japan and India have been draining cash, causing the Group much financial stress. Cost containment and reducing cash burns remain key priorities evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India.
This is the firmest sign from AirAsia that they would plan to leave India. Plans for the airline have not been working out really, with the airline not getting the license to operate international flights at the moment, and various investigations that have been opened up on the airline which don’t seem to go away so far.
This is a harmful sign for the airline either way, because news like this, even without substance, encourages people to book away from the airline, which causes a downward spiral of its own and causes more financial stress to the airline. Not very reassuring in the times of CoVid-19, which has already caused airlines to bleed, some even to death.
Bottomline
AirAsia Bhd, 49% owner of AirAsia India has indicated that there is a review ongoing of AirAsia India which seems to be a financial drain on their resources at the moment. There have been other reports that Tatas have been in discussion to buy out AirAsia’s stake in the airline.
What do you ake of this new AirAsia India news of a potential exit by AirAsia? What would the airline be called once AirAsia walks away? Questions Questions.
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The way I see it, AirAsia had an non compete clause against the TATAs and while they could bid on Air India, they needed AirAsia approval for Air India Express, this probably wouldn’t be an issue now and perhaps if Air Asia exits India and the TATAs end up bidding for Air India and are successful in acquiring it, AI Express and AirAsia India could be merged.